The cost of 3g iPad models?

[identity]

Does it really cost more to add a mobile chip to the iPad? I find it kind of frustrating that having a mobile chip costs hundreds more than the same version with just wifi.

That being said, I'm looking forward to a 4gLTE iPad 3 if it's true but I'll get the 3g/4g iPad regardless so I can use it on the go instead of a phone. It's either the iPad 3 or the Galaxy Note.

 

[Arnezie]

$130 more and you don't have to buy one. They appealed and overturned that federal law that said you must buy one

 

[falcora]

There is a real cost associated in adding a 3G chip into a mobile device. This is why the unsubsidized cost of an iPhone 4 is $549 and an iPod Touch costs $199. It's more or less the same hardware. 3G chips for $129, Apple is still probably making some profit, but it's not as severe as you think.

 

[Buildbright]

The Ipad 3g only costs $20 more to make. $16-$18 for the chip and $2 labor and parts.


It is documented that apple makes the most off the 3g models. The Ipod touch current generation and Iphone 4s are actually very different. The current iphone has:

3g radio
Dual Core CPU
Bigger Battery
High Powered GPU
Better Sound DAC
8gb More Memory
Better 8mp Camera
512mb Ram
Camera Flass
More Expensive Casing

Really the only thing they share is the Screen.

 

[porcupine8]

A) You're also paying the R&D costs to fit that chip inside along with everything else without increasing thickness at all.

B) Since when do any companies only increase prices when their costs increase? Products are priced at what the market will handle, and clearly the market is ok with $130 for 3G. It's worth that much to enough people. It sucks, I agree, I don't want to pay it - but after being frustrated with my wifi-only while traveling a few times, I'm probably going to suck it up and pay the premium next time. Because now I realize that it actually is worth that much to me (though I hope they lower the premium for the 3, but I doubt it).

 

[urkel]

Does it really cost more to add a mobile chip to the iPad? I find it kind of frustrating that having a mobile chip costs hundreds more than the same version with just wifi.

Yes, it does cost more. But it would be nice if it were cheaper or a standard feature.

1) Fragmentation: Buying the WiFi model not only means you don't get 3G, it also means you don't have a GPS radio. So if 3G and GPS arent "standard" features then app developers aren't spending time taking advantage of them which is a shame.

2) Paying for the ability to Pay More: Apple gets 30% for every app sold in the app store so there's a benefit for offering the ability to buy apps to their product. On a smaller scale, Apple struck deals with ATT with the iPhone so they got paid a portion of our bills. So IF there is some carrier kickback for subscribing to 3G then Apple benefits from us having these radios because some day we might use it.

3) R&D Costs are an Excuse: While R&D is a legitimate cost, it can be used as an excuse too often for price gouging. Figuring out the camera took R&D but they they added both the hardware and the "research" for free because its a value add to their product. The same can be said for the 3G radio and GPS. I'm not saying they should be free, but a lower cost would get more people to recognize its value.

 

[poloponies]

Yes, it does cost more. But it would be nice if it were cheaper or a standard feature.

1) Fragmentation: Buying the WiFi model not only means you don't get 3G, it also means you don't have a GPS radio. So if 3G and GPS arent "standard" features then app developers aren't spending time taking advantage of them which is a shame.

2) Paying for the ability to Pay More: Apple gets 30% for every app sold in the app store so there's a benefit for offering the ability to buy apps to their product. On a smaller scale, Apple struck deals with ATT with the iPhone so they got paid a portion of our bills. So IF there is some carrier kickback for subscribing to 3G then Apple benefits from us having these radios because some day we might use it.

3) R&D Costs are an Excuse: While R&D is a legitimate cost, it can be used as an excuse too often for price gouging. Figuring out the camera took R&D but they they added both the hardware and the "research" for free because its a value add to their product. The same can be said for the 3G radio and GPS. I'm not saying they should be free, but a lower cost would get more people to recognize its value.

Apple didn't invent this upcharging concept. Buy a car lately? "You want Navigation? That's part of our $2,499 touring package."

Businesses develop ways to maximize profits. Some businesses take some of that money and use it in other ways to create a better user experience. For example, whenever I read a post of "how nice Apple was" in replacing a device that was damaged by the owner's carelessness it rankles me a bit. Why is it Apple's responsibility to do that? But they can do it.

I've worked for companies in the past that were considered similarly high end and elitist, but if you went back with a problem years later they'd address it. They went out of their way to ensure that the overall experience was a positive one.

So is $129 high for 3G/GPS - probably, but it makes sense from a business perspective. If you want to look at it another way, you're getting a discount for buying WiFi only.

 

[JeepGuy]

The Ipad 3g only costs $20 more to make. $16-$18 for the chip and $2 labor and parts.

it's not the cost of the chip, it's all the license fees associated with it, why do you think there are so many law suits, 3g is build on many patients that apple doesn't own.

 

[deeddawg]

it's not the cost of the chip

Also, cost is essentially irrelevant for non-commodity products beyond whether or not the cost allows a market price target to be achieved.

What governs the price difference between Wifi-only and 3G models is at what level can Apple maximize total profits. It boils down to the old adage: "Charge what the market will bear."

 

[urkel]

Apple didn't invent this upcharging concept. Buy a car lately? "You want Navigation? That's part of our $2,499 touring package."

So is $129 high for 3G/GPS - probably, but it makes sense from a business perspective. If you want to look at it another way, you're getting a discount for buying WiFi only.

Im not arguing and I agree with you. But my point was that Apple COULD lower the price without hurting themselves because their business model has so many revenue streams that lowering the cost of 3G models would still result in profiting somewhere else.

 

[vixducis]

Really the only thing they share is the Screen.

Even that isn't true, if I recall correctly, the iPhone uses an IPS display, whereas the iTouch still uses a standard TN panel. There both 'retina' however.

But, back on topic: wouldn't it be better for apple to make all iPads 3G, and raise the price by $30? A less diverse offering makes more profit in general.

 

[ThatsMeRight]

The Ipad 3g only costs $20 more to make. $16-$18 for the chip and $2 labor and parts.


It is documented that apple makes the most off the 3g models. The Ipod touch current generation and Iphone 4s are actually very different. The current iphone has:

3g radio
Dual Core CPU
Bigger Battery
High Powered GPU
Better Sound DAC
8gb More Memory
Better 8mp Camera
512mb Ram
Camera Flass
More Expensive Casing

Really the only thing they share is the Screen.

They will always make more on the 3G models, but it's not just about $20 more. Remember all the licenses and certifications that are involved.

There is a real cost associated in adding a 3G chip into a mobile device. This is why the unsubsidized cost of an iPhone 4 is $549 and an iPod Touch costs $199. It's more or less the same hardware. 3G chips for $129, Apple is still probably making some profit, but it's not as severe as you think.

Not true. The iPod touch has completely different hardware than the iPhone 4S. They save a lot on cameras, build quality [glass, steel] (making the antennaband alone costs quite a bit more), newer chips (A5 chip against the very early-2010 A4 chip). It adds up quite a bit, and than I'm not even talking about licenses and stuff.

They definitely make a lot of profit on the iPhone, but I'm also sure the iPhone is way more expensive to make than the iPod touch.

And oh, even the display in the iPod touch isn't the same (like Buildright is suggesting). The iPhone 4S uses a high-quality LCD display with IPS technology, while the iPod touch definitely doesn't use IPS technology (for the great viewing angles and contrast) and it's rumoured it doesn't use Gorilla Glass either.

 

[deeddawg]

A less diverse offering makes more profit in general.

Seen the cereal aisle at a supermarket lately?

To your comment though, you are right to a point. It's a balancing act. Too few options for the customer and you leave gaps for the competition to fill. Too many options and the inefficiencies from excess diversity becomes a problem. The challenge is to find the "Goldilocks" spot.

 

[barkomatic]

The higher cost of models with the 3G is not justified--I think its mostly a marketing decision. Anyway, at least Apple doesn't force us into cellular contracts like most other tablet makers. The difference in costs for those are even worse -- $300-$400 more for off contract 3G/4G *and* they will charge you activation fees. That's a downright scam.

Anyway, I'd pay the extra for a 4G iPad regardless. It's worth it to have the option even if you don't use it that often. I sometimes spend a lot of time at airports and many still charge an arm and a leg for a few hours of crappy wifi service.

 

[DeusInvictus7]

The iPads are actually one of the cheaper (price difference wise) tablets when going from wifi to the 3G model.

Here in Canada, the Samsung Galaxy Tab 10.1 16GB is $399 for the wifi model, but it's $649, which is the same cost as the iPad 2 16GB+3G.

 

[falcora]

They will always make more on the 3G models, but it's not just about $20 more. Remember all the licenses and certifications that are involved.



Not true. The iPod touch has completely different hardware than the iPhone 4S. They save a lot on cameras, build quality [glass, steel] (making the antennaband alone costs quite a bit more), newer chips (A5 chip against the very early-2010 A4 chip). It adds up quite a bit, and than I'm not even talking about licenses and stuff.

They definitely make a lot of profit on the iPhone, but I'm also sure the iPhone is way more expensive to make than the iPod touch.

And oh, even the display in the iPod touch isn't the same (like Buildright is suggesting). The iPhone 4S uses a high-quality LCD display with IPS technology, while the iPod touch definitely doesn't use IPS technology (for the great viewing angles and contrast) and it's rumoured it doesn't use Gorilla Glass either.

I know that the processors are different, amongst other things. Thats why I was comparing the iPod touch to the iPhone 4, not the 4S. But you are right about the IPS display differences. What I'm trying to convey is that there is a real cost associated with adding 3G radios and antennas.

 

[Arnezie]

The Ipad 3g only costs $20 more to make. $16-$18 for the chip and $2 labor and parts.


It is documented that apple makes the most off the 3g models. .

What is your source for this information and where is it "documented "

 

[Buildbright]

What is your source for this information and where is it "documented "

Various tear down sites such as Ifixit. Besides I am an Electronics tech and could price one out if you want?

 

[brand]

I am an Electronics tech and could price one out if you want?

Just because you call yourself an "Electronics tech" does in no way mean that you could price out iPad. I'm sure all you would do is source one of the articles that has already performed a teardown and part/price list.

 

[Buildbright]

Just because you call yourself an "Electronics tech" does in no way mean that you could price out iPad. I'm sure all you would do is source one of the articles that has already performed a teardown and part/price list.

First off I have a degree second who are you? You ever think of spending time challenging what I have to say you might do some research. That's the problem with kids today you would rather argue then educate yourself.

http://www.techspot.com/news/42823-isuppli-apples-ipad-2-costs-33325-to-build.html

Hopefully you can muster enough will to click the link. Geesh.

 

[brand]

First off I have a degree second who are you?

Well my name is Brand. I also have a degree and been working in systems administration 8 years.

You ever think of spending time challenging what I have to say you might do some research. That's the problem with kids today you would rather argue then educate yourself.

I am challenging your ability to price out an iPad just because you are an "Electronics tech." Linking to another source that has does not qualify.

http://www.techspot.com/news/42823-isuppli-apples-ipad-2-costs-33325-to-build.html

Hopefully you can muster enough will to click the link.

You did exactly like I said you would do and just link to another site that has already done a teardown and part/price list. You haven't priced anything out and haven't done anything more than a simple Google search. Try not to hurt yourself.

 

[Buildbright]

Well my name is Brand. I also have a degree and been working in systems administration 8 years.

I am challenging your ability to price out an iPad just because you are an "Electronics tech." Linking to another source that has does not qualify.



You did exactly like I said you would do and just link to another site that has already done a teardown and part/price list. You haven't priced anything out and haven't done anything more than a simple Google search. Try not to hurt yourself.

Don't troll me because you didn't like my comments about your fanboism to the Op of the transformer prime post.

What source do you want me to site? Do you think its some mystery what a Qualcomm chipset costs? I stated earlier I got the pricing from an online source. Isuppli is a leader in market research for the tech industry. And yes I can use my expertise to read through the report to see if they're report seems legitamate.

System administration for 8 years and you have nothing better to do than troll me? I would think someone of your age would have some sort of life. Lol

I won't reply again so don't bother trying.

 

[daleski75]

I have also wondered why the 3G version of the iPad costs around £100/$100 more than the equivalent Wifi version because in my little head it wouldn't cost Apple an extra £100/$100 for a 3G quad band chipset.

However I won't pretend to have any knowledge of parts or supplies or manufacturing costs personally just my perception of what I think it would cost Apple which of course is less than the difference between both models.

Maybe it's a marketing thing but regardless I would pay the extra anyway as you never know when you might need it out and about and having a sim card always in there is much better than tethering or using a mifi device.

 

[deeddawg]

Maybe it's a marketing thing

BINGO! All this talk about cost based pricing is pointless on a non-commodity product. The parts lists / costs and bills of materials articles are comically naive as they also don't account for overhead, R&D, warranty allocations, support costs, etc.

When you have a differentiated product with minimal competition and high demand, you charge as much as you can balancing the different angles of supply, demand, and market penetration. Yes you do want to cover your costs (which are FAR more than the sum of parts), but even then you might consider selling at a slight loss to build market share when the majority of profits come from secondary transactions on the platform (razors/blades, printers/ink, iDevices/iTunes, etc).

It may very well be true that a 3G iPad costs $30 more in parts than a Wifi-only unit. Still irrelevant if people are happy to pay $130 more and buy nearly all Apple can make.